California insurers to charge homeowners for FAIR Plan bailout after LA wildfires

"Most of the temporary fees imposed by the state's largest insurance companies will be relatively small, a few dollars per month, averaging around $50 to $60 in total over two years, according to a review of regulatory filings by the Bay Area News Group. While the charges are unlikely to cause serious financial hardship for most homeowners, they've raised concerns that future catastrophic wildfires could lead to even higher fees, as policyholders statewide are already being hit with steep rate hikes and some have been dropped from their plans."

"The charges stem from a mandated $1 billion bailout by insurance companies of the state's last-resort insurance program, known as the FAIR Plan, after it ran out of money to cover roughly $4 billion in claims from victims of the Los Angeles wildfires, which damaged or destroyed nearly 13,000 homes. Under recently updated regulations by state regulators, insurers can recoup up to half of the bailout cost directly from their policyholders. The amount each insurer must pay is determined by its market share of premiums in the state. The state insurance department has already approved the individual surcharges proposed by many insurers."

"Homeowners with a standard policy through State Farm - the state's largest insurer, with more than a million homeowner plans - will see a totalfee averaging $57.70, with charges averaging 1.13% over two annual renewal periods, according to regulatory filings. Condo owners will be billed an average of $25.10, at a 2.25% rate over just one year. The charges, spread across policyholders' monthly payments, are set"

California insurers will add temporary surcharges to homeowners' monthly premiums to help pay claims from recent Los Angeles wildfires. Most surcharges will amount to only a few dollars per month, totaling about $50–$60 over two years for typical policies. The fees stem from a mandated $1 billion industry bailout of the FAIR Plan after it exhausted funds covering roughly $4 billion in wildfire claims. State rules allow insurers to recover up to half of the bailout cost from policyholders, allocated by each insurer's market share. State Farm policyholders and condo owners face specified average charges.

Read at The Mercury News